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Eisner to Roberts: Not So Fast

Eisner to Roberts: Not So Fast

Despite dissent among the board of directors at the Walt Disney Co., the group will not likely accept a $56 billion takeover bid by Comcast Communications, according to published reports.
Early Wednesday, Comcast launched a surprise all-stock offer to buy out Disney, parent of ABC, the Disney film studio, ESPN and a raft of other media assets. The combination would make Comcast the biggest media content and distribution company in the world. Including the assumption of Disney’s debt, Comcast valued its offer at about $66 billion.
Under terms of the proposal, Disney shareholders would own 42 percent of the combined company. Disney shareholder would receive .78 shares of Comcast stock for each of their Disney shares, putting the initial value of the offer at about $56 billion, or $26.46 a share. By Friday morning, Disney stock had reached $28 per share.
In the wake of the move by Comcast, which kept a lid on the plan until its formal announcement, Disney retained Goldman Sachs and Bear Stearns to evaluate the offer, according to The Washington Post. While Disney stock jumped after the announcement, effectively diminishing the value of Comcast’s offer, the House of Mouse could further erode the bid by paying a one-time dividend to shareholders, which Comcast would then have to absorb in an acquisition.
The bid from Comcast comes on the heels of a much-publicized battle within the Disney board over Chairman Michael Eisner’s handling of the company. Eisner’s harshest critic, Walt Disney’s nephew, Roy Disney ultimately resigned from the board and started working on his own shareholder revolt.
Observers said Comcast’s bid was just an opening volley of what would be a long takeover battle. Comcast’s recent $29 billion acquisition of AT&T made it the nation’s largest cable firm with 21 million subscribers. Comcast must pay monthly, per-subscriber carriage fees for the cable networks carried on its system. Among those, ESPN has come to be one of the costliest. At an estimated per-sub fee of $1 (considering a probably “most favored nation” clause giving Comcast a volume discount), buying ESPN alone could ultimately save Comcast $252 million a year.
FCC Chairman Michael Powell told lawmakers Comcast’s effort to take over Disney would receive high scrutiny at the commission